Citigroup settles last Enron bankruptcy claims for $1.7 billion

Citigroup, Enron’s biggest creditor, finally threw in the towel rather than take its claims to court next month. The mega-bank, which has been slammed by credit losses in recent months, agreed to pay almost $1.7 billion to settle outstanding bankruptcy claims brought by Enron Creditors Recovery Corp.

At the same time, Citi agreed to drop claims that Enron owed it more than $4 billion.

The case had been set to go to trial next month in New York. If the deal is approved by the court, it will resolve the last of the “mega-claims” in Enron’s six-year-old bankruptcy liquidation. The settlement will allow for Enron to return another $5 billion to creditors, in addition to a $1 billion distribution already scheduled for April 1, the company said in a release.

In all, Enron will return about $20 billion to creditors by the time the bankruptcy proceedings are complete. That’s a pretty remarkable recovery given Enron’s size and the speed of its demise. Citi had indicated it intended to fight the case, but a few weeks ago, a judge denied it’s attempt to move the dispute to a different court.

Citi was one of Enron’s primary enablers, and the bankruptcy examiner’s report found it played a key role in helping Enron executives breach their duties to investors. Even with the settlement, though, creditors are a long way from being made whole.